Spending 320 pages reading about failure may not seem like the most compelling idea, but hear me out. Economics and business journalist Megan McArdle’s first book makes a strong and thought-provoking case for the importance of failure.
McArdle walks us through failures of all kinds: her own personal failures, numerous stories of business and entrepreneurial failures and even society’s failures. She convincingly demonstrates how vital it is to try things you might fail at — and if you do fail, what lessons to take away from those experiences. Indeed, her argument as it pertains to business is that this characteristic is at the very heart of what drives American innovation.
Failure obviously makes us uncomfortable. Even the thought of failing at something can give the most confident person pause. However, being willing to take risks and fail — and recognize those failures — is critical to your own life and the success of your business.
McArdle spends one chapter, for instance, on the long and protracted downfall of General Motors, and the ways that GM’s management was unwilling to react to many cues inside the business that all was not well, until it was too late. They fell prey to normalcy bias, or “acting as if things are fine when they quite obviously are not.” Not being able to deal with the failures as they happened meant that later, things for GM were much, much worse.
One of the things I liked best about this book, and McArdle’s work in general, is her ability to boil controversial topics down to their economic effects. She’s got a knack for making you question your own assumptions.
For instance, she argues, quite convincingly, that the relative permissiveness of U.S. bankruptcy laws help support small business development in a way that, net-net, is a positive thing for society. It allows entrepreneurs the ability to take risks, start businesses, fail, and then not be bound to those failures for the rest of their lives. They can then try again, starting new businesses.
This cycle contributes to what makes America’s economy so vibrant, supporting the growth of small businesses. Sure, some folks may abuse our lax bankruptcy laws, but overall the effect is a win. Were we to tighten up, she argues, we’d de-incentivize small business growth. Many European countries, for instance, have much tighter bankruptcy standards, which results in far fewer small businesses there as “innovators decide it’s not worth the risk.”
It’s that kind of contrarian thinking that makes this book a great read.
— LouAnn Lofton, email@example.com